International Business Strategy Lecture 6 Concept of Strategic Groups PDF

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Covered concept of strategic groups...

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Week 4 Lecture Learning Objectives ● Concept of strategic groups and their strategy and performance implications ● Consolidation Strategic Groups Within Industries Cluster of firms that share an interest ● Similar price points/products ● Degree of vertical integration ● Type of distribution Vertical integration is when a firm has control of a number of parts of the supply chain. (T-Shirt maker owning the manufacturing of the shirt)

Process for constructing a strategic group map Step 1 - identify characteristics that differentiate firm's in an industry Step 2 - plot firm's on a two variable map using pairs of these differentiating characteristics Step 3 - Assign firms that fall into the same strategy space to same strategic group Step 4 - Draw circles around each group, making circles proportional to size of group’s respective share of total industry sales

Example being similar car brands targeting different market segments. Strategic groups in the motor industry can be plotted on a graph measured by Price Point and Breadth of Product Line. In the Pharmaceutical Industry can be measured through Prices Charged and R&D Spending. Proprietary Group (High Price Charged/High R&D Spending) are protected through patents and once those patents have expired the Generic Group will make generic (cheaper) versions of the products Retail Chains through Price/Quality and Geographic Coverage. High Priced/Quality retailers will have fewer locations than a Low Cost retailer....